USEC Inc. to Implement Financial Restructuring Plan

Plan supported by majority of noteholders and by preferred
investors, Toshiba and B&W

Daily operations continue unaffected

Filing relates only to parent company

USEC to fully meet obligations to customers and suppliers as
operations continue

USEC terminates Tax Benefit Preservation Plan

March 05, 2014 06:02 AM Eastern Standard Time

BETHESDA, Md.--(BUSINESS WIRE)--USEC Inc. (NYSE:USU) announced today that it is implementing the
agreement reached with a majority of the holders of its senior unsecured
convertible notes that was announced in December 2013. This agreement
sets forth the terms of a financial restructuring plan to strengthen the
company’s balance sheet, enhance its ability to sponsor the American
Centrifuge project and improve its long-term business opportunities. The
company also announced today that it reached agreement with its
preferred equity investors, Toshiba Corporation and The Babcock & Wilcox
Company, to support the restructuring plan.

In order to implement the agreement, USEC today filed a voluntary
petition and a plan of reorganization under Chapter 11 of the bankruptcy
code in the U.S. Bankruptcy Court for the District of Delaware. USEC
anticipates receiving Court approval for its prearranged plan of
reorganization and emerging from Chapter 11 in 90 to 120 days. None of
USEC’s subsidiaries, including its primary operating subsidiary the
United States Enrichment Corporation, have filed for bankruptcy
protection.

The Company had positive cash flow from operations in 2013 and ended the
year with a cash balance of $314 million. During the restructuring
process, USEC’s subsidiary, the United States Enrichment Corporation,
will provide debtor-in-possession (DIP) financing to USEC that will
support continued operations. No third-party DIP financing will be
required. After meeting its significant payables in the first quarter,
the Company anticipates a cash balance of at least $60 million at March
31, 2014.

This filing has no impact on USEC’s daily operations, which includes the
company’s efforts to deploy the American Centrifuge uranium enrichment
technology and perform the research, development and demonstration
program partially funded by the U.S. Department of Energy. As a
non-debtor, United States Enrichment Corporation’s operations, which
include the transition of the Paducah Gaseous Diffusion Plant back to
the U.S. Department of Energy (DOE) and the sale of SWU from its
inventory and purchases of Russian low enriched uranium, continue
unaffected.

“By addressing the October 2014 maturity of the convertible notes, USEC
will be able to pursue its ongoing business objectives with greater
certainty,” said John K. Welch, USEC president and chief executive
officer. “The restructuring will strengthen USEC’s balance sheet and
enhance the company’s ability to sponsor the American Centrifuge
project. Throughout this process our operations will continue. We will
continue to make customer deliveries, execute the RD&D program and
continue progress on transitioning the Paducah GDP.”

The plan of reorganization, which is supported by those holding
approximately 65 percent of USEC’s debt, as well as Toshiba and Babcock
& Wilcox, calls for replacing USEC’s $530 million debt and all of its
preferred and common stock with a new debt issue totaling $240.4 million
and new common stock. The new debt issue would mature in five years and
can be extended for an additional five years subject to certain
conditions. The noteholders would receive $200 million of the new debt
and approximately 79 percent of the common stock, Toshiba and Babcock &
Wilcox would each receive $20.19 million of the new debt and
approximately 8 percent of the new common stock. Existing stockholders
would receive 5 percent of the new common stock. USEC’s board of
directors and management team are substantial holders of the common
stock and their holdings will be treated exactly as all other common
shareholders. In addition, any unvested or unexercised stock awards they
hold will be forfeited under the plan.

USEC issued the original notes in 2007 at a time when the nuclear power
industry was expected to grow significantly and the American Centrifuge
Plant was expected to be completed and producing operating cash flow
before the notes matured. In addition, USEC, Toshiba and Babcock &
Wilcox entered into an agreement in 2010 for a phased preferred equity
investment to strengthen the Company’s financial position for deployment
of the American Centrifuge technology. The company’s deployment plans
for the American Centrifuge Plant have been affected by delays in
obtaining permanent financing for construction and by a global
oversupply of nuclear fuel following a devastating tsunami in Japan that
resulted in extensive damage to reactors at Fukushima in 2011. More than
50 nuclear power reactors in Japan and Germany were shut down. The
resulting oversupply caused nuclear fuel prices to drop to their lowest
levels in a decade, which has negatively affected the economics of
deploying the American Centrifuge technology in the near term. Other
factors that have affected the Company’s deployment plans include
increases in the cost of several key commodities, and changes and
additions to project scope and schedule.

The current USEC board of directors will oversee the restructuring
process until the effective date of the plan when a new board would take
its place. B&W and Toshiba each retain the right to representation on
the board of directors.

The restructuring plan support agreements entered into by Toshiba and
Babcock & Wilcox and other materials related to the filing can be found
in an 8-K filed today with the Securities and Exchange Commission and is
available in the Investors section of the company’s website, www.usec.com.
In addition, documents related to the Chapter 11 filing are available at www.loganandco.com.

In connection with the bankruptcy filing, USEC’s board of directors also
approved the termination of the company’s tax benefit preservation plan,
which was originally scheduled to expire on September 29, 2014. The plan
has been amended to accelerate the expiration date to March 4, 2014,
effectively terminating the plan as of that date.

USEC expects to issue its fourth quarter 2013 earnings and its Annual
Report on Form 10-K in late March. During the period its case is pending
in Bankruptcy Court, USEC will not hold quarterly telephonic conference
calls with investors.

USEC has informed and discussed the Chapter 11 filing with the New York
Stock Exchange. The Company’s most recent quarterly update on its plan
of compliance to meet the Exchange’s continued listing standards was
accepted and the stock has traded since the Company’s December 16
announcement that it had reached a restructuring agreement. The NYSE
will continue to monitor the Company under its continued listing
standards throughout the Chapter 11 process.

USEC’s legal advisor for the restructuring is Latham & Watkins LLP, its
financial advisor is Lazard, and its restructuring advisor is Alix
Partners LLP. An ad hoc group of holders of USEC's senior convertible
notes is advised by Akin Gump Strauss Hauer & Feld LLP and Houlihan
Lokey.

USEC Inc., a global energy company, is a leading supplier of enriched
uranium fuel for commercial nuclear power plants.

Forward-Looking Statements

This news release contains “forward-looking statements” within the
meaning of Section 21E of the Securities Exchange Act of 1934 - that is,
statements related to future events. In this context, forward-looking
statements may address our expected future business and financial
performance, and often contain words such as “expects”, “anticipates”,
“intends”, “plans”, “believes”, “will” and other words of similar
meaning. Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. For USEC, particular risks and
uncertainties that could cause our actual future results to differ
materially from those expressed in our forward-looking statements
include, but are not limited to the impact of and risks related to USEC
Inc. commencing a “prearranged” case under Chapter 11 of the bankruptcy
code including risks related to obtaining approval and confirmation of
USEC Inc.’s plan of reorganization, the impact of any delay or inability
in obtaining such confirmation, the impact of a potential de-listing of
our common stock on the NYSE, the impact of our restructuring on the
holders of our common stock, preferred stock and convertible notes;
risks related to the ongoing transition of our business, including the
impact of our ceasing enrichment at the Paducah gaseous diffusion plant
and uncertainty regarding our ability to deploy the American Centrifuge
project; uncertainty regarding funding for the American Centrifuge
project after April 15, 2014 the date for completion of the current
period of funding for the research, development and demonstration
(“RD&D”) program and the potential for a demobilization or termination
of the American Centrifuge project if additional government funding is
not in place at the end of the current funding for the RD&D program;
risks related to the underfunding of our defined benefit pension plans
and potential actions the Pension Benefit Guarantee Corporation could
pursue in connection with ceasing enrichment at the gaseous diffusion
plants or with any demobilization or termination of the American
Centrifuge project; the impact of uncertainty regarding our ability to
continue as a going concern on our liquidity and prospects; our ability
to reach an agreement with the U.S. Department of Energy (“DOE”)
regarding the transition of the Paducah gaseous diffusion plant and
uncertainties regarding the transition costs and other impacts of USEC
ceasing enrichment at the Paducah gaseous diffusion plant and returning
the plant to DOE; the continued impact of the March 2011 earthquake and
tsunami in Japan on the nuclear industry and on our business, results of
operations and prospects; the impact and potential extended duration of
the current supply/demand imbalance in the market for low enriched
uranium (“LEU”); the impact of enrichment market conditions, increased
project costs and other factors on the economic viability of the
American Centrifuge project without additional government support and on
our ability to finance the project and the potential for a
demobilization or termination of the project; uncertainty concerning the
ultimate success of our efforts to obtain a loan guarantee from DOE
and/or other financing for the American Centrifuge project or additional
government support for the project and the timing and terms thereof; the
dependency of government funding or other government support for the
American Centrifuge project on Congressional appropriations or on
actions by DOE or Congress; limitations on our ability to provide any
required cost sharing under the RD&D program; uncertainty concerning our
ability through the RD&D program to demonstrate the technical and
financial readiness of the centrifuge technology for commercialization;
potential changes in our anticipated ownership of or role in the
American Centrifuge project, including as a result of the need to raise
additional capital to finance the project; the impact of actions we have
taken or may take to reduce spending on the American Centrifuge project,
including the potential loss of key suppliers and employees, and impacts
to cost and schedule; the potential for DOE to seek to terminate or
exercise its remedies under the RD&D cooperative agreement or June 2002
DOE-USEC agreement; changes in U.S. government priorities and the
availability of government funding or support, including loan
guarantees; risks related to our ability to manage our liquidity without
a credit facility; our dependence on deliveries of LEU from Russia under
a commercial supply agreement (the “Russian Supply Agreement”) with a
Russian government entity known as Techsnabexport (“TENEX”) and
limitations on our ability to import the Russian LEU we buy under the
Russian Supply Agreement into the United States and other countries;
risks related to actions taken by either the U.S. Government or the
Russian Government that could affect our ability or the ability of Tenex
to perform the Russian Supply Agreement, including the imposition of
sanctions, restrictions or other requirements; risks related to our
ability to sell our fixed purchase obligations under the Russian Supply
Agreement; the decrease or elimination of duties charged on imports of
foreign-produced low enriched uranium; pricing trends and demand in the
uranium and enrichment markets and their impact on our profitability;
movement and timing of customer orders; changes to, or termination of,
our agreements with the U.S. government; risks related to delays in
payment for our contract services work performed for DOE, including our
ability to resolve certified claims for payment filed by USEC under the
Contracts Dispute Act; the impact of government regulation by DOE and
the U.S. Nuclear Regulatory Commission; the outcome of legal proceedings
and other contingencies (including lawsuits and government
investigations or audits); the competitive environment for our products
and services; changes in the nuclear energy industry; the impact of
volatile financial market conditions on our business, liquidity,
prospects, pension assets and credit and insurance facilities;; the
timing of recognition of previously deferred revenue; and other risks
and uncertainties discussed in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K and
quarterly reports on Form 10-Q. Revenue and operating results can
fluctuate significantly from quarter to quarter, and in some cases, year
to year. We do not undertake to update our forward-looking statements
except as required by law.